EU adopts 12th package of sanctions against Russia

Introduction

The European Union (EU) recently implemented its 12th package of economic and individual sanctions against Russia. These sanctions are in response to Russia’s ongoing war against Ukraine. The latest package includes several measures. These are designed to put pressure on Russia and limit its ability to circumvent sanctions.

Contract clause

A key element of the 12th package is the inclusion of a contract clause applicable to all companies. This is true whether or not they do business in Russia. This clause requires EU exporters to prohibit the re-export of various goods and technology to Russia when sold to third countries.

The required contract clause with customers in third countries covers the sale, supply or transfer of goods or technology listed in Annex XI, XX and XXXV of Council Regulation (EU) No. 833/2014, common high-priority goods listed in Annex XL, or firearms and ammunition listed in the Annex of Regulation (EU) No. 258/2012.

Exporters must contractually prohibit re-exporting to Russia. In addition, exporters should ensure that the agreement contains appropriate remedies in case of breach of contractual obligations. In the event of such a violation, the exporter is also required to notify the competent authority of the violation.

The contract clause is an important tool for preventing the misuse of sensitive goods and technology. It requires companies to be aware of their responsibilities. To prevent unwanted and possible unwitting indirect support to Russia. By banning the re-export of these items to Russia, the EU aims to disrupt the supply chain. This makes it more difficult for Russia to access essential products and technologies. In most cases, this will require companies to perform additional due diligence and very essentially update their contract templates to meet this requirement.

Impact for you

It is crucial to understand the implications of this contract clause even if you are not directly involved with trade with Russia. Compliance with this clause is necessary to avoid potential legal and reputational risks. Companies should check their supply chain and contracts to ensure they are in compliance with the EU sanctions regime and take the necessary steps to prevent unintended support to Russia.

This requirement can be challenging, especially for companies that have not previously been involved in business in Russia and therefore have not actively assessed their portfolio for the goods listed in the annexes of the latest sanctions package.

Entire update 12th sanctions package

If you are looking for comprehensive information and detailed insight on the 12th package of sanctions against Russia and its impact on businesses, we encourage you to visit the official press statement.

This package includes a series of measures designed to put pressure on Russia and limit opportunities to evade sanctions. Some important (other) measures are:

1. Diamond ban
2. No re-export to Russia clause: as discussed above.
3. Designations and trade sanctions: The EU has designated individuals and entities, as well as an expansion of restricted items. Notable is the inclusion of the phrase “whether or not originating in the Union” and the ban on transit with respect to Annex XXIII.
4. Enforcement and anti-evasion measures
5. Iron and steel: Switzerland has been added as a partner country applying import bans on iron and steel from Russia, and transition periods for specific steel products have been extended.
6. Software: The introduction of the ban on direct or indirect sale, supply, transfer, export or provision of most software (as per Schedule XXXIX), such as ERP, CRM, BI and SCM software.

Help

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